Working Capital

What is Cash Credit? Meaning, Calculation, Features, Process, And How Does It Work?

Cash Credit Meaning Cash credit is one of the methods of financing provided by the banks and financial institutions to their business customers by taking the customers’ collateral in exchange for cash. It is not often offered to individual customers. The cash credit limit is based on the borrower’s need and their payment capacity as …

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Working Capital and Liquidation (Explained with example)

Introduction: Working capital is the amount incurred after deducting current liabilities from the current assets of a company, it is the capital used by businesses to cover their day-to-day expenses of operation. It is a measure of a company’s liquidity position and its financial strength; working capital reflects the ability of a company to settle …

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What is the Concept of Working Capital? (Gross Working Capital and Net Working Capital)

Working capital is the amount of capital revolving, circulating in the short term to facilitate the daily operations of the business. It is considered the backbone of every business as it plays a very important role in the growth of the business. That’s why financial managers give the utmost importance to working capital management for …

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What is Working Capital in Financial Management? (Concept and Objective)

Financial management is an important activity with a vital role in organizing, planning, controlling, and monitoring of business resources. It helps organizations to use their financial resources in a more efficient way to achieve their goals and objectives. The branch of financial management which deals with the efficient management of current assets and current liabilities …

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How to Calculate Working Capital? (Detail explanation with example)

The company’s working capital is important for the number of key stakeholders including executives, employees, and shareholders, and investors. Positive working capital simply means the company’s current assets at the reporting are higher than its current liabilities. That means, in the short-term, around 12 months from the reporting date, the company could use the current …

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Why is Working Capital Negative? (Explanation With Example)

Introduction: Working capital is the amount of a company’s current assets less than the number of current liabilities; this capital of a business is required to fulfill the daily trading operation of a business. Net working capital is normally positive when total current liabilities less than total current assets. And negative working capital occurs when …

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Working Capital Ultimate Guide: Definition, Calculation, Example, and More

Definition: Working capital is a term commonly used for the capital required for day-to-day working in a business entity, purchasing raw materials to be used in production, and meeting daily expenditures like salaries, wages, advertising, etc. It is also popularly called circulating capital due to its nature, which keeps changing. Working capital depicts those assets …

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